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Should you take out health cover before June 30?

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If you're on a high income or about to send out invites for your 31st, it can make great financial sense to take our private hospital cover before June 30.

Why? Well, when it comes to encouraging more of us to take health cover, the federal government has a give-and-take approach.

The "give" is a rebate. The "take" is, as you would have guessed, a grab on your hip pocket.

health insurance private health cover hospital cover eofy june 30 tax effie zahos

Take out private health insurance and, depending on your income, the government will help pay your premiums. You can work out what you may be entitled to with the tax office's rebate calculator.

But choose not to take out insurance and you can pay in a couple of ways.

If you earn over $90,000 (singles) or $180,000 (families and couples) there's a Medicare levy surcharge if you don't have hospital cover (extras-only policies don't count).

The surcharge is calculated at the rate of 1% to 1.5% of your income.

This is in addition to the Medicare levy of 2%. Depending on your income the surcharge could well cover the cost of a policy, so it pays to think about whether this surcharge could be better spent on the insurance.

If you're over 31 and don't take cover before June 30, then a 2% lifetime loading is payable on top of your premiums for every year you don't have private health insurance. The loading applies only to hospital cover.

The loading compounds so if you're 40 and take out cover now for the first time you'll pay a whopping 20% on top of your premiums.

After 10 years of cover the loading is removed.

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Effie Zahos is editor-at-large at Canstar and a financial commentator. She is the author of A Real Girl's Guide to Money: From Converse to Louboutins, and a regular money commentator on TV and radio across Australia. In 1999, a background in banking Effie helped kickstart Money, which she edited until 2019. Effie holds a Bachelor's degree in economics.
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